BMW Says Less Expensive Cars Will Remain In Production

Matt Posky
by Matt Posky
bmw says less expensive cars will remain in production

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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  • 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.

  • Bobbysirhan Apple fans must be heartbroken that they'll have to wait a few more years to buy an EV that's entirely the work of child slaves.
  • Master Baiter True self-driving is going to require dedicated roads, and a requirement that all cars on such roads have a minimal suite of self-driving hardware and software. Given that that Washington is incapable of building anything other than bombs and missiles, some other country, probably China, will have to lead the way. Maybe 20 years after they have this in Asia, we'll get self-driving here in the U.S.
  • IH_Fever The sales model was neat, especially the delivery part, but other than that, what was carvana besides carmax without a traditional brick and mortar lot? It couldn't keep its finances (or title documents) in order. Let it burn.
  • IH_Fever EV charger on a GM lot, probably with a Cummins generator to keep them running. A regular melting pot haha
  • Tassos Wake me up when VW (or any other loser "Legacy" automaker comes up with a "BETTER TESLA" BEV AT THE SAME PRICE. SO far, VW has FAILED MISERABLY AND LOST BILLIONS DOING IT. Its models are way underwhelming and inferior, and cost not much less than the model 3. ANd DESPITE the SCANDALOUS $7,500 tax credit, which is an INVERSE ROBIN HOOD, takes from the average household and gives it to the average BEV buying family, which has an income of $170k+, VW STILL FAILED.ALso notice the so-called "Mobility Officers" at FORD AND Renault QUIT. another HUGE SCAM, Autonomous Vehicles, they wasted 100s of billions (all idiot legacy makers together) and predicted billions of profits, but so far they DROWN IN A SEA OF RED INK with NOTHING to show for it. Morons will be morons, and the ones in this forum will cheer for their failures "AWESOME, WV, Indeed"! LOL!!!