Can BMW Remain the Ultimate Money Machine?

Andrew Dederer
by Andrew Dederer
can bmw remain the ultimate money machine

Yesterday, Consumer Reports (CR) rated Cadillac’s new CTS a better whip than both a BMW 328i and Mercedes C300. Never mind that CR preferred the Infiniti G35 and Acura TL. A Bimmer had been bested by a Caddy! This is news! Bimmers are the buff book benchmark! Yes, well, tying the commercial success of BMW’s 3s and 5s to their on-road abilities is a perfect example of false synchronicity. While many models are justly coveted for their dynamic delights, their on-road performance is tangential to their sales appeal. BMW’s mojo lies elsewhere, in a more precarious place.

It’s worth repeating: in most head-to-head competitions, BMWs no longer deliver a knock-out blow. Their straight-line speed is impressive, but there are faster. Their interiors are nice, but Audi’s are better. Their seats are wonderful, but the passenger accommodations offer precious little lebensraum for the buck. Speaking of which, BMWs are significantly more expensive and/or under-equipped vis a vis their price-equivalent competition.

This leaves one strong link to BMW’s “Ultimate Driving Machine” brand boast: handling. Again, there are better handling cars– especially considering BMW’s recent penchant for passion-killing run-flat tires and active steering. More generally, does anyone seriously suggest BMWs are the best handling cars throughout their [enormous] model range? Plenty of Mazda, Infiniti, Mercedes and (now) Cadillac fans are willing to throw down to the Roundel’s rep for corner-carving kudos.

The truth about BMW is this: while the brand gets mad props from motor-journalists, the German automaker banks its bucks thanks to a very different demographic with a very different concept of “performance.”

While BMW still aims for the luxury car market stratosphere (the 7-Series and Rolls, neither of which amount to much) and slums it in the lower reaches (the premium-priced MINI line), the propeller badge might as well be a rifle sight. And yuppies are in the crosshairs.

No car is more identified with a particular rung of the corporate ladder than BMW. Nothing says “mover and shaker” more than an alphabet soup 3 or 5 in a reserved parking place. We’re not talking about the top slot; the truly highly-placed drive something with more presence. BMW is the ne plus ultra for upper middle execs, corporate clones whose cars must stand out from the “ordinary” (cynics might say “practical”) machines driven by the company’s lesser lights.

Overpaying is part of the cachet, “I’m going places, and I don’t need to worry about what it cost.” Sure, Bimmer’s rep for speed and handling is a nice seasoning. But truth be told, the sort of person who regularly buys/leases a BMW probably doesn’t have the time to go joyriding. The exact position of this “Bimmer spot” within the corporate hierarchy varies from country to country, but the template remains the same: Urban Professional on the Move.

On the Move. Ultimate Driving Machine. Done. It doesn’t really matter if a BMW lives up to its strapline– just as long as this business suit-wearing herd member buys the brief. The ultimate driving in question is symbolic; the BMW brand represents the single-minded “drive” known as personal ambition. Not to coin a phrase, if you own a BMW, you’re moving forward.Onwards. Upwards.

BMW’s recent, phenomenal success is tied almost exclusively to the explosive success of this well-fed corporate demographic. Some argue that the brand’s move down market has hurt their brand cachet. The opposite may be true. Ironic as it sounds, appealing to the upper middle class pack mentality may have propelled the propeller people’s products to even greater heights, saleswise.

And now, the reckoning?

If there is a significant worldwide economic downturn, existing and potential BMW buyers may not make enough bonus– or simply feel “safe” enough– to take on a new car after three to five years. Should the corporate axeman’s blade swing through the lower executive level with particular violence, BMW sales will suffer widespread decapitation.

That’s the problem with near luxury products. They’re not expensive enough to rise aove the fray, and they’re not cheap enough to fly under the corporate accountant’s radar.

Meanwhile, exchange rates are making things even more precarious. To compensate for currency fluctuations, BMW must either raise model prices and enter into entirely different segments or hold the line and take the hit on profits. Whether here [U.S.] or abroad, the falling dollar threatens to move its models up one or more “classes.” Instead of merely being notably more expensive than their Japanese and American competitors– for which “badge cachet” compensates– BMWs are becoming especially expensive.

If you thought the end of the SUV boom was bad for Detroit, The Big 2.8s exposure looks modest compared with BMW’s potential exposure to a general economic downturn. As Porsche proved back at the tail end of the 80s, if the worst happens, all BMW can do is… wait.

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  • GaryM GaryM on Feb 07, 2008

    Ouch... this hurt but was too true. I was an up and coming exec when I bought a 325i in '93. In fact the sales rep's pitch when he saw my Jetta Gli was was a shockingly blatant "you need something more fitting for your status". After years of downsizing, the internet bubble etc. I stopped drinking the corporate kool aid and now drive a "low ego emissions" VW Jetta Tdi. Who cares what is sitting in the parking lot as long as you like the car? If I did want to impress people with what I am driving, I can't think of one BMW I would want to own ... in my opinion, Bangle ruined their designs and sadly his influence continues to infect things like the new Accord, the recent Camry etc. If I wanted a performance car, I wouldn't even look at BMW.

  • Nitro13 Nitro13 on Feb 08, 2008

    Bangle has not ruined anything. The 3 series is still the class leader in sales numbers. If the current designs were that repugnant to the consumer, this would be reflected in sales. People are voting with their wallet, and one month of lackluster sales proves nothing. The Legacy, which is also a 32k car, and the Acura TSX, a Japanese Honda Accord in drag with an anemic four cylinder engine, are not even in the same class as a 328 or 325, and they certainly are not "amazing" cars. If I wanted to save money, I would take a one year old 3 series, which would have three years of free maintenance included and a 100k mile CPO warranty over any of the cars you mention. And you would even get a little blue and white roundel thrown in for free. And as far as value goes, many people on this board fail to understand that, if you are intending to purchase, a $5000-$8000 premium for the BMW is not a deal breaker to many. And if you lease, and if you do your homework, with BMW subvented rates, it is possible to drive a BMW for a lot less than you think. And I don't buy the "lease queen" nonsense. A very large portion of individuals who drive luxury marks lease. This is not unique to BMW.

  • SCE to AUX I charge at home 99% of the time, on a Level 2 charger I installed myself in 2012 for my Leaf. My house is 1967, 150-Amp service, gas dryer and furnace; everything else is electric with no problems. I switched from gas HW to electric HW last year, when my 18-year-old tank finally failed.I charge at a for-pay station maybe a couple times a year.I don't travel more than an hour each way in my Ioniq 1 EV, so I don't deal much with public chargers. Despite a big electric rate increase this year, my car remains ridiculously cheap to operate.
  • ToolGuy 38:25 to 45:40 -- Let's all wait around for the stupid ugly helicopter. 😉The wheels and tires are cool, as in a) carbon fiber is a structural element not decoration and b) they have some sidewall.Also like the automatic fuel adjustment (gasoline vs. ethanol).(Anyone know why it's more powerful on E85? Huh? Huh?)
  • Ja-GTI So, seems like you have to own a house before you can own a BEV.
  • Kwik_Shift Good thing for fossil fuels to keep the EVs going.
  • Carlson Fan Meh, never cared for this car because I was never a big fan of the Gen 1 Camaro. The Gen 1 Firebird looked better inside and out and you could get it with the 400.The Gen 2 for my eyes was peak Camaro as far as styling w/those sexy split bumpers! They should have modeled the 6th Gen after that.