BMW Says Less Expensive Cars Will Remain In Production

Matt Posky
by Matt Posky

BMW Chief Executive Oliver Zipse has said that despite the automaker’s status as a luxury carmaker it would not be abandoning lower-priced segments while it swaps over to electric vehicles. Though the general trajectory for the Bavarian marquee – and the automotive industry in general – over the last several years has been to chase higher margins by focusing on pricier, often larger, vehicles and clever packaging.


The German company even said as much in 2017, with former product management and brand chief Hildegard Wortmann saying that the company had to do what was necessary to maintain BMW’s notoriety as an automaker. Five years ago, this meant more electric vehicles and ensuring that its luxury products were a cut above by offering modern technologies and cleaner styling. BMW was all about going upmarket, just starting to get serious about electrification, and seemed torn between honoring its heritage and reinventing itself.


“I think it’s important when you have such a strong brand that you keep it fresh all the time, that you keep it original, that you keep it on the edge,” Wortmann noted at the time.


While some of this shift didn’t come to fruition, especially the then-rampant promises tied to automated driving, BMW did scale back options and entire trim levels for some of its smaller models. By 2021, it had even killed off the all-electric i3 – its most-affordable all-electric model – in the United States. Though the cuts were more noticeable in the European market where the company had fielded far more pint-sized models. BMW was already becoming distressed at the meager profits it was seeing from vehicles retailing below €40,000 and believed that it could do better by focusing on pricier units.


The plan seems to have worked, with the company enjoying a profit surge in the third quarter of this year despite overall sales being down. BMW Group reported that it had booked a net profit of nearly 3.2 billion euros ($3.1 billion USD), which was up from 2.6 billion euros between July and September of 2021. Success was attributed primarily to elevated pricing and healthy demand for its fancier models. The same was true of its electrified models which typically come with MSRPs that eclipse their gas-driven counterparts.


However, BMW also stressed that sustained inflationary pressures could complicate things moving forward. The economy has gotten so bad that many people are being bounced out of the market entirely, likely leaving BMW catering to the only demographic that’s managed to avoid financial setbacks – people that were relatively wealthy to begin with.


“High inflation rates and interest rate hikes are causing conditions for consumers to deteriorate, which will impact their purchasing behaviour [sic] in the coming months,” the company explained in its latest earnings statement.


Meanwhile, CEO Zipse is trying to assure the public that it’s not going to be following Mercedes's current playbook – which involves culling entry-level models and spending the brunt of its developmental dough on top-end (see: highest margin) vehicles and high-volume staples like the C and E-Class.


"We are not leaving the lower market segment. Even if you consider yourself a premium manufacturer, it is wrong to leave the lower market segment – that will be the core of your business in the future," Reuters quoted Zipse as saying during a recent event hosted by supplier Robert Bosch GmbH in Berlin.


Maybe so. But BMW has already taken a lot of actions that seem counter to the promises it’s currently making and Europe – a market where the company can actually sell less-expensive products with some amount of consistency – looks as though it’s entering into a period of severe economic duress. So far as we know, the automaker doesn't have any small combustion vehicles forthcoming and the iX1 which starts for around $53,000 in Europe doesn't look like it's coming to North America. That leaves our market with the $56,000 i4 eDrive40 as the brand's most affordable EV. Though it does look like the X1 (starting around $39,000 before fees) may stick around for another generation. The 230i Coupe is also still around, however it doesn't seem like BMW sells a lot of those in the base format.


[Image: Sklo Studio/Shutterstock]

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Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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 9 comments
  • SCE to AUX SCE to AUX on Nov 09, 2022

    I didn't know BMW sold 'lower-cost' models - or is it April 1st?

    • Dukeisduke Dukeisduke on Nov 10, 2022

      They've usually sold cheaper stuff in Europe, so maybe that's what they're talking about.


  • VoGhost VoGhost on Nov 09, 2022

    BMW's issue is model proliferation. They have, what, 8 different ICE crossovers? And for each of those 8, typically 2-3 engine configurations. And now they are adding a similar # of EV crossovers. Dozens of different crossover models sold in the US, and all of them combined sell as much as the Model Y? That's a problem.

    • See 5 previous
    • MaintenanceCosts MaintenanceCosts on Nov 10, 2022

      You mention colors... but recently a lot of BMW's color palette has been black, metallic black, slightly purplish black, and slightly navyish black. Add onto that white and pearl white.


  • Ronin The very asking of the question "Are Plug-In Hybrids the Future?" is an interesting one. Because just 2 or 3 years ago we'd be asking- no, asserting- that E cars are the future. We're no longer asking that question.
  • Peter Benn There apparently were some K-code 4-dr sedan Fairlanes. Collectible Automobile Apr 2024 has found a '63 500 with HD 3/spd.
  • Mia Hey there!I recently stumbled upon the Crack Eraser DIY Windshield Repair Kit (check it out here: https://crackeraser.com/collections/diy-windshield-repair-kits) and decided to give it a shot on a small chip in my windshield. I have to say, it worked like a charm! Super easy to use, and it saved me a trip to the professionals. If you're dealing with a similar issue, this kit is definitely worth considering. 😊
  • Rust-MyEnemy Whoa, what the hell is wrong with Jalop1991 and his condescension? It's as if he's employed by Big Plug-In or something."I've seen plenty of your types on the forums....."Dunno what that means, but I'm not dead keen on being regarded as "A type" by a complete stranger"" I'm guessing you've never actually calculated by hand the miles you've driven against the quantity of gas used--which is your actual miles per gallon."Guess again. Why the hell would you even say that? Yes, I worked it out. Fill-to-fill, based on gas station receipts. And it showed me that a Vauxhall Astra PHEV, starting out with a fully charged PHEV battery, in Hybrid mode, on my long (234-mile) daily motorway daily commute, never, over several months, ever matched or beat the economy of the regular hybrid Honda Civic that I ran for a similar amount of time (circa 5000 miles)."You don't use gasoline at all for 30-40 miles as you use exclusively battery power, then your vehicle is a pure hybrid. Over 234 miles, you will have used whatever gas the engine used for 200 of those miles."At least you're right on that. In hybrid mode, though, the Astra was using battery power when it wasn't at all appropriate. The petrol engine very rarely chimed in when battery power was on tap, and as a result, the EV-mode range quickly disappeared. The regular hybrid Civic, though, deployed its very small electric reserves (which are used up quickly but restore themselves promptly), much more wisely. Such as when on a trailing throttle or on a downward grade, or when in stop-start traffic. As a result, at the end of my 234 miles, the Civic had used less gas than the Astra. Moreover, I hadn't had to pay for the electricity in its battery.I look forward to you arguing that what actually happened isn't what actually happened, but I was there and you were not."Regardless, that you don't understand it appears not to have stopped you from pontificating on it. Please, do us all a favor--don't vote."You really are quite unpleasant, aren't you. But thanks for the advice.
  • Tassos Jong-iL Electric vehicles are mandated by 2020 in One Korea. We are ahead of the time.
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