The ever more stringent European emissions standards are a challenge for all carmakers, not just BMW. Basically, a lot of the difficulties that apply to BMW also apply to the automotive industry as a whole.

In regards to currencies, automakers will hedge against a currency years in advance. Therefore although the € has gained strength, essentially what the German and other EU carmakers did was lock in, or hedge the currency years in advance (usually 3-5yrs I think) so that fluctuations will not significantly erode the bottom line. That said, North America has been an unprofitable market for BMW in the last few years. That's reflected in the shift of vehicle allocations to other markets such as the Middle East and Asia, where there has been continued growth in spite of the recession. Once again, this statement also applies to other EU makers as well.

btw. i think we all deserve to read this report when its complete!

__________________
BMWCCA

Hedging works when you know the amount to hedge. Changes in volume from that expected will erode the effectiveness of the hedging strategy. Given that vehicles sales have been significantly impacted during the current recession, those hedging strategies can easily turn into liabilities.

__________________
2007 X3 3.0si, 6 MT, Premium, White

Retired:
2008 535i, 6 MT, M Sport, Premium, Space Grey
2003 X5 3.0 Steptronic, Premium, Titanium Silver
2002 325xi 5 MT, Steel Grey
2004 Z4 3.0 Premium, Sport, SMG, Maldives Blue

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

__________________
2007 X3 3.0si, 6 MT, Premium, White

Retired:
2008 535i, 6 MT, M Sport, Premium, Space Grey
2003 X5 3.0 Steptronic, Premium, Titanium Silver
2002 325xi 5 MT, Steel Grey
2004 Z4 3.0 Premium, Sport, SMG, Maldives Blue

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

I was told in my International Business class that locking in currency rates from a bank is usually only for a 90-180 day period...

Of course. Be on the lookout for Sunday night. This paper is due Monday! Naz, thanks so much for the help btw!

I was thinking about this earlier today and am going to go into detail on the "ad-war" that was going on (from 2006 to the one now). However, the idea of the marketing scheme got me thinking about suggestions for BMW (see last part of OP). VW has Audi's R8, Porsche (soon to be VW) has a 911 turbo/Carrera, Daimler has the SLR, and Ford has the GT. The point that I'm trying to make is: with looking at each company's top production car, it seems BMW is behind on the curve on this one. Can someone discuss this (whether or not this is something that I should look into?) I honestly feel that I'm on to something, but I might be missing something altogether.

Thanks for all the input guys!

BMW's answer to the R8 ad about the "luxury badge" should be the F02 760li twin turbo V12... not only the most luxurious car BMW has made to date, but one of the fastest and most powerful to boot!

__________________
"When you do things right, people won't be sure you've done anything at all" (Bender, futurama)

You make something idiotproof, they'll make a better idiot

You think professional is expensive, just wait until you pay for amateur.

Never let your sense of morals prevent you from doing what is right.

Examine what is said, not who speaks.

X5 pics

RIP 4.6is.....

2003 4.6is