BMW Research Project - Please Help !

Tleong · #1 11-17-2009, 05:24 PM

Quote:

Originally Posted by AzNMpower32

If someone hasn't already given you the website, the BMW Group webseite has a lot of information. If you wanted to "think" like the company, you would tout about it's high corporate sustainability index and it's commitment to the environment. Statistics like how 95% of a BMW vehicle can be recycled and how 15% of all plastics in a vehicle come from recycled material are sure to please the statisticians. EfficientDynamics* technologies such as Auto Start-stop, Brake regeneration, Shift point display, and adaptive aerodynamics are standard on every BMW. And BMW Manufacturing in Spartanburg uses innovative techniques to reduce CO² emissions and reuse resources. Well, all their factories are innovative but I suppose folks in the US will care about US manufacturing.

BMW Group

*not applicable to NA models

Just to pose a counter-argument, although their materials may be eco-friendly, the vehicles themselves are not. One of the threats that BMW faces in the near future is the tighting of environmental regulations relating to cars, in particular to EU nations. I will post article when I get home later, but do you think BMW will be able to overcome this challenge and still be competitive?

AzNMpower32 · #2 11-17-2009, 06:48 PM

Quote:

Originally Posted by Tleong

Just to pose a counter-argument, although their materials may be eco-friendly, the vehicles themselves are not. One of the threats that BMW faces in the near future is the tighting of environmental regulations relating to cars, in particular to EU nations. I will post article when I get home later, but do you think BMW will be able to overcome this challenge and still be competitive?

What makes you think their cars are not environmentally friendly? BMW just started selling the special 320d EfficientDynamics Edition, with a taller final drive and special aerodynamic wheel design. It is one of the most fuel efficient vehicles sold on the road and consumes only 4,1 l/100km, nearly 58 US mpg and right on par with the Toyota Prius. CO² output is just 109 g/km. That's less than any engine offered in any Honda Civic (European model), Citroen C3, or VW Golf.

Tleong · #3 11-18-2009, 12:13 PM

Quote:

Originally Posted by AzNMpower32

What makes you think their cars are not environmentally friendly? BMW just started selling the special 320d EfficientDynamics Edition, with a taller final drive and special aerodynamic wheel design. It is one of the most fuel efficient vehicles sold on the road and consumes only 4,1 l/100km, nearly 58 US mpg and right on par with the Toyota Prius. CO² output is just 109 g/km. That's less than any engine offered in any Honda Civic (European model), Citroen C3, or VW Golf.

This is the article that hinted at BMW's immediate threats.

"The EU Commission and the EU Parliament have adopted a directive (EURO 4) that establishes
increasingly stringent emission standards for passenger and light commercial vehicles for the financial
year 2005 and thereafter. Under the directive, manufacturers would be responsible for the emissions
performance of these vehicles for five years or 100,000 kilometers, whichever occurs first. A more
stringent emission standard (EURO 5) is also in final stages of discussion within the EU legislative
bodies which will be effective in 2009.The EU Commission intends to define even more stringent
emission standards (EURO 6), which, if adopted, would become mandatory around 2014 or 2015.
These regulations would impose additional costs on the company's operations."

I'm not exactly sure how this affects BMW more than other car companies that operate in the EU, but it's something that I will have to look into. It comes from a reliable source, so I can imagine there is some degree of truth in it. Not sure what everyone else thinks.

I'm also having trouble finding threats and weaknesses that are inclusive to BMW only. The above article can also affect Daimler as well. Another interesting article is concerning the currency risk in BMW's portfolio because it operates in so many countries... however, that could apply to Daimler as well, couldn't it? Are there no threats/weaknesses unique to BMW or am I just missing something?

JCL · #4 11-19-2009, 01:46 AM

Quote:

Originally Posted by Tleong

I'm also having trouble finding threats and weaknesses that are inclusive to BMW only. ....Are there no threats/weaknesses unique to BMW or am I just missing something?

While not unique to BMW, I think that BMW is exposed because of their overdependence on the US market, which pays much less for the same vehicle than other markets do. The US is essentially a price driven market for these types of vehicles (sport/luxury/prestige).

I also think BMW is exposed because of the perceived or real quality of their dealer network. The US commonly refers to BMW dealers as "stealerships". That is, and should be, insulting to those who work in dealerships. You are only as good as your distribution chain, and US BMW customers don't appear to value the contribution of BMW dealerships. BMW knows this, and it explains their focus on customer surveys in an effort to weed out the lower quality dealers.

BMW knows that they can't compete on manufacturing competence or volume, so they are going for more niche products. Makes sense. Lots of variations of similar themes. That is why they rebuilt the US plant, to introduce more flexible manufacturing tooling to handle multiple products with less retooling costs. The trouble is that endlessly pursuing niches introduces new problems for a smaller manufacturer. Look at the amount required to certify new models, at the testing costs, at the technical and sales training costs for the distributor and dealer network. In addition, there is the risk of brand dilution.

I would focus on these types of issues over the product issues. BMW is a purchaser of parts and components, an integrator of parts and components, a designer, a product developer, a manufacturer, an assembler, a distributor, and the manager of a dealer network. Which of these can they do really well, and which are more of a challenge? Don't just think of driving a shiny new model, that represents just the tip of the iceberg that is readily visible. It is the bulk of the above list (the stuff under the water) that matters as well.

Just my $0.02

Tleong · #5 11-19-2009, 08:18 PM

Quote:

Originally Posted by JCL

While not unique to BMW, I think that BMW is exposed because of their overdependence on the US market, which pays much less for the same vehicle than other markets do. The US is essentially a price driven market for these types of vehicles (sport/luxury/prestige).
Can you explain this further? I'm not quite sure what you're trying to say. However, according to FY2008 (2009 is released at the end of this month), U.S. accounted for 21.3% of all revenue compared to Germany (20.2%) and Europe + UK (29.7% and 9.2% respectively).

I also think BMW is exposed because of the perceived or real quality of their dealer network. The US commonly refers to BMW dealers as "stealerships". That is, and should be, insulting to those who work in dealerships. You are only as good as your distribution chain, and US BMW customers don't appear to value the contribution of BMW dealerships. BMW knows this, and it explains their focus on customer surveys in an effort to weed out the lower quality dealers.
Are there any studies/professional reports that suggest this? I understand that BMW dealerships are not fancied among their consumers, but in FY 2008, BMW Financial Services (Leases, financing, etc.) were the only profitable unit - accounting for 26.2% of total revenue. Is the "stealership" mentality a proven one on paper and/or studies? Or simply a general consensus among car-drivers. Also... on a related note, I have heard of other brands such as Infiniti and Toyota who have poor service and are referred to as "stealerships" as well. Perhaps this isn't just BMW? (Just a thought)

BMW knows that they can't compete on manufacturing competence or volume, so they are going for more niche products. Makes sense. Lots of variations of similar themes. That is why they rebuilt the US plant, to introduce more flexible manufacturing tooling to handle multiple products with less retooling costs. The trouble is that endlessly pursuing niches introduces new problems for a smaller manufacturer. Look at the amount required to certify new models, at the testing costs, at the technical and sales training costs for the distributor and dealer network. In addition, there is the risk of brand dilution.

I would focus on these types of issues over the product issues. BMW is a purchaser of parts and components, an integrator of parts and components, a designer, a product developer, a manufacturer, an assembler, a distributor, and the manager of a dealer network. Which of these can they do really well, and which are more of a challenge? Don't just think of driving a shiny new model, that represents just the tip of the iceberg that is readily visible. It is the bulk of the above list (the stuff under the water) that matters as well.

Just my $0.02

Thank you for the input, it definitely spurs some ideas and things I will look into