BMW
Image retrieved from: Click here.
BMW is a German automobile manufacturing company that was founded in 1917. The company also deals with motorcycles and engine manufacturing. BMW is publically owned, where the consumer may purchase stock options. This being said, the company is controlled by the Quandt family in Europe. The Quandt family owns more than 50 percent of the shares and they have the control to determine who sits on the board. By having this control, the Quandt family may determine the final selections and designs BMW decides to release publically, after initial start-up phases. BMW Group has set ambitious goals for 2011 following 2012. The three (3) main goals that BMW has set out for are:
- Full-Year sales and earnings targets reaffirmed at AGM
- Company to expand leading position in the auto industry
- BMW Group to hire around 2,000 new staff in 2011
- Employees to receive record profit share
The BMW Group has foreshadowed the correct. BMW can look ahead to the current financial year with confidence after a powerful first quarter. The company’s goal for setting new earning records in the current economic year (2011) will remain unchanged. BMW is also targeting an all-time high for the up and coming season. Norbet Reithofer, Chairman of the Board of Management of BMW AG is quoted saying “We aim to deliver more vehicle than ever before – well over 1.5 million vehicles”. This being said, Reithofer continues to say that the company’s EBIT margin target of more 8% for the automobile segment will remain the same.
The Clear route to sustainable mobility is first goal BMW Group has set out. The issue of future mobility is being more energetically pursued. BMW will be launching its innovative BMW i3, the first pure electric vehicle for major cities, on the market in 2013. This will be followed with the BMW i8, an ultimately fuel-efficient sports car. BMW will be making its future combustion engines even more economical. The company says that thanks to fuel-saving EfficientDynamics technology, BMW fleets boast more than 50 vehicles with CO2 emissions of 140 grams/kilometre or less. That being said, with an average of 154 grams/kilometre in Germany, the BMW Group is also one of leading premium manufactures in terms of efficiency according to the German federal motor transport authority (Kraftfahrtbundesamt).
Profit sharing at record level/ 2,000 new hires is the second goal BMW has set out. Employees covered by collective pay-scale agreements will receive an average of 5,840 Euro. Together, most pay-scale employees will take home a total profit share of 7,490 euro for the year of 2011. Due to the strong global demand for BMW, MINI and Rolls-Royce, the company will be hiring around 2,000 new employees over the course of a year—more than half of them in Germany.
BMW Group builds most reliable cars according to ADAC breakdown statistics for their third goal. For BMW to secure financial profitable growth in the future, the BMW Group will also be using common architectures and modules across model series. What this basically means is BMW is developing the best cars on the market with simplicity. According to ADAC statistics, BMW Groups build the most reliable cars in the world. The MINI took first place in the small car category, as did the BMW 1 Series in the lower middle class. The BMW X3 placed first in the middle class, and the BMW 5 Series was ranked second in the upper middle class.
The Fourth Goal that BMW has strived towards is achieving record earnings in the first quarter of 2011. To get the total amount of revenues in the different areas of the company please click here.
Source: BMW Group Sets Ambitious Goals for 2011, http://www.bmwblog.com/2011/05/12/bmw-group-sets-ambitious-goals-for-2011/, accessed March 26th 2012.
“BMW was conceived alongside with three other manufacturing companies, Fahrzeugfabrik Eisenach in Thuringia and Rapp Motorenwerke and Bayerische Flugzeugwerke (BFw) in Bavaria. Rapp Motorenwerke became Bayerische Motorenwerke in 1916. The engine manufacturer, which built proprietary industrial engines after World War I, was then bought by the owner of BFw. The owners then merged BFw into BMW and moved the engine works onto BFw’s compounds. BFw’s motorcycle sideline was improved by BMW and became a fundamental element of their business.
BMW then became an automobile manufacturer in 1929 when it purchased Fahrzeugfabrik Eisenach, which, at the time, built Austin Sevens under licence under the Dixi marque. BMW’s team of engineers progressively developed their cars from small Seven-based cars into six-cylinder luxury cars and, in 1936, began production of the BMW 328 sports car. Aircraft engines, motorcycles, and automobiles would be BMW’s main products until World War II. During the war, against the wishes of its director Franz Josef Popp, BMW concentrated on aircraft engine production, with motorcycles as a side line and automobile manufacture stopped altogether.
After the war, BMW survived by making pots, pans, and bicycles until 1948, when it restarted motorcycle production. Meanwhile, BMW’s factory in Eisenach fell in the Soviet occupation zone and the Soviets restarted production of pre-war BMW motorcycles and automobiles there. This continued until 1955, after which they concentrated on cars based on pre-war DKWdesigns. BMW began building cars in Bavaria in 1952 with the BMW 501 luxury saloon. Sales of their luxury saloons were too small to be profitable, so BMW supplemented this with building Isettas under licence. Slow sales of luxury cars and small profit margins from microcars caused the BMW board to consider selling the operation to Daimler-Benz. However, Herbert Quandt was convinced to purchase a controlling interest in BMW and to invest in its future.
Quandt family tree:
Picture(s) retrieved from Google
Quandt’s investment, along with profits from the BMW 700, brought about theBMW New Class and BMW New Six. These new products, along with the absorption of Hans Glas GmbH, gave BMW a sure footing on which to expand. BMW grew in strength, eventually acquiring the Rover Group (most of which was later divested), and the license to build automobiles under the Rolls-Roycemarque.”
Source: History of BMW, http://en.wikipedia.org/wiki/History_of_BMW, accessed March 26th 2012.
The Quandt Family has the majority of shares in the company making them the powerhouse for control. According to Wikipedia, the Shareholder structure is as follows:
By Ownership:
Stefan Quandt: 17.4%
Johanna Quandt: 16.7%
Susanne Klatten: 12.6%
Free Float: 53.3%
By Types:
Strategic investors: 46.7%
Institutional investors:
North America: 15.8%
United Kingdom and Ireland: 11.8%
Other Europe: 5.7%
Germany: 4.8%
Rest of the world: 2.5%
Other investors: 12.7%
Source: Shareholders Structure http://en.wikipedia.org/wiki/BMW#Shareholders_structure accessed March 26th 2012
BMW has an extensive line of production vehicles. In the year of 2006 BMW produced 1,366,838 four-wheeled vehicles, which were manufactured in five countries. It was reported that approximately 56% of BMW vehicles produced are petrol-engine powered and the remaining 44% are diesel engine powered. Of the petrol vehicles, approximately 27% of those are four-cylinder models and about 9% are eight0cylinder models. The production of BMW vehicles has been dispersed all around the world. The following chart(s) provided by Wikipedia show the distribution in production of BMW abroad.
Annual Production
|
Year |
BMW |
MINI |
Rolls-Royce |
Motorcycle |
| 2005 |
1,122,308 |
200,119 |
692 |
92,012 |
| 2006 |
1,179,317 |
186,674 |
847 |
103,759 |
| 2007 |
1,302,774 |
237,700 |
1,029 |
104,396 |
| 2008 |
1,203,482 |
235,019 |
1,417 |
118,452 |
| 2009 |
1,043,829 |
213,670 |
918 |
93,243 |
| 2010[2] |
1,236,989 |
241,043 |
3,221 |
112,271 |
Production by country
|
Country |
Make |
2006 |
2008 |
Models |
| Germany | BMW |
905,057 |
901,898 |
BMW 1, 3, 5, 6, Z, X1, |
| Mexico | BMW |
1,500 |
100,000[19] |
BMW X3, X5, 3, 5, 7, and Motorcycles |
| China | BMW |
N/A |
67,00 |
BMW 3, 5 series |
| Russia | BMW |
1,500 |
2,000 |
BMW X5, X6, 5-series |
| United Kingdom | Mini |
187,454 |
235,019 |
All Minis |
| Rolls-Royce |
67 |
1,417 |
All Rolls-Royce | |
| Austria | BMW |
114,306 |
82,863 |
BMW X3 |
| United States | BMW |
105,172 |
170,741 |
BMW X3, X5, X6 |
| South Africa | BMW |
54,782 |
47,980 |
BMW 3-Series |
| Total |
1,366,838 |
1,439,918 |
Source: Production, http://en.wikipedia.org/wiki/BMW#Production, accessed March 26th 2012.
BMW is a broad term defining several models of the brand company. To make things simplistic I will target the BMW 3 series and expound the important information needed to complete this study.
In marketing, the objective of the marketer/company is to target a specific group of consumers who would most likely appeal to the product being advertised. By doing so, the marketer/company has utilized all of its resources on a specific target as opposed to a broad one. BMW 3 series over the course of decades has shifted from the exotic specific car to the more modern family car. While there are women driving the 3 series, the target market is approximately 75-85% male, with an age bracket of approximately 25-60 years of age. BMWs, in the days were considered very expensive, and BMW re-assessed their pricing methods and decided to please the middle-class, but still maintain the upper-class consumer. By doing so, BMW has widened its demographic, by appealing to a wider consumer target.
Photo Retrieved from: Click here. * Showing the move towards a more family vehicle.
The greater gain of BMW 3 Series owners are between the ages of 25-35 and 45-60. Statistical data shows that the demands for BMW 3 Series are in between those respected age groups. As I have discussed earlier, the BMW 3 Series is targeted more towards males. BMW has seen substantial demand in their vehicles. Being the world’s largest luxury carmaker, BMW said it perceives an upmarket boom.
“The German automotive group behind the Mini, BMW and Rolls-Royce marques said worldwide sales rose 14% to 1.67m vehicles in 2011, spurred by strong demand from China and a resurgent United States. The announcement came on the opening of the Detroit Motor Show, the industry’s gala event, and in the wake of confirmation that Rolls-Royce had posted the most successful 12-month sales period in its 107-year history.
Speaking in Detroit, BMW sales executive Ian Robertson said: “2011 was an excellent year for the BMW Group. We have clearly attained our sales target of more than 1.6m vehicles and our models continue to be in high demand right across the world.” Robertson added that BMW planned to remain the world’s largest premium carmaker in 2012, with the company expecting the global market for luxury vehicles to grow by more than 8% this year.”
Source: BMW enjoys record sales as upmarket car demand soars, http://www.guardian.co.uk/business/2012/jan/09/bmw-record-sales-car-luxury-demand, accessed March 26th, 2012
The stages of production for BMW have been shifting a greener approach. The plants have had some adjustments over the years to accommodate such initiatives.
“With the addition of the new turbines, the Landfill Gas project will return an additional average annual cost savings to BMW of up to $2 million and reduce carbon dioxide emissions by approximately 92,000 tons per year or the equivalent to the benefit of planting over 23,000 acres of trees annually or 30 times the size of New York’s Central Park. BMW Manufacturing is completing a $750 million expansion to add 300,000 square feet to their Paint Shop and construct a new 1.2 million square foot Assembly plant. Many new technologies throughout the new construction support BMW’s sharp focus on energy savings, including: Installation of a new paint conveyer system technology that reduces overall water consumption in the Paint Shop by 50 percent.
A new concept for air ventilation that will save an estimated 31 percent of energy when compared to using a conventional ventilation system
A new Integrated Paint Process that will reduce the paint shop’s waste by nearly 80 percent
In addition, BMW Manufacturing recycles over 83 percent of all waste streams and uses Solar energy to power the a trash compactor in the company’s main cafeteria. Use of the solar-powered trash compactor dramatically reduces the frequency of trash collection, reducing fuel cost and exhaust fumes. This solar-powered trash compactor is the first in use at an automotive plant in the United States.
BMW Manufacturing is a subsidiary of BMW AG in Munich, Germany and is the global producers of the BMW X5 Sports Activity Vehicle and X6 Sports Activity Coupe. In addition to the South Carolina manufacturing facility, BMW North American subsidiaries include sales, marketing and financial services operations in the United States, Canada and throughout Latin America; and a design firm and technology office in California.”
Source: BMW manufacturing ranked No. 7 on EPA green power list, http://www.reliableplant.com/Read/19325/bmw-manufacturing-ranked-no-7-on-epa-green-power-list, accessed March 26th 2012.
There was an interesting article Click here, that shows BMW’s productivity rate rising over 10 percent from 2007. The 10 percent growth is supposed to affect all plants worldwide.
The following chart shows the approximate base prices for BMW 3 series. Prices may vary substantially due to packages, warranty, accessories and so forth.
Source: 2012 BMW3-Series Pricing, http://www.automobilemag.com/am/2012/bmw/3_series/prices.html, accessed March 26th 2011.
According to Automotive News, BMW has witnessed an 11.8 percent profit margin, up eight percent from last year. The methods were calculated using earnings before interest & tax methods (EBIT).
In terms of competition, Audi would be considered BMWs’ top competition. The competition took place in two areas: 1) advertising campaigns and 2) production of top of the line vehicles. The two mega-competitive German lavish brands have famously clashed in a famous advertisement AUDI V. BMW. BMW has also been in competition with Mercedes. BMW being the world’s finest carmaker, with profits in 2012 at 57.7% up from last year, has shown to have the competitive advantage over Mercedes and Audi. Operating losses were approximately $823 million. BMW has been striving for years to compete in the ‘green industry’ and has been successful in doing so, and still maintain the elegant/luxurious look their cars have been showing for decades. To learn more click here.
Some of the weaknesses the company may have are the marketing strategies. BMW needs to do more in terms of targeting to female consumers. They can do so by producing a special edition vehicle tailored to females only.
To conclude, BMW for decades has been providing luxurious vehicles to upscale consumers with affordable pricing. BMW has had values that have gone a long way in the automotive industry. BMW commands astonishing customer loyalty, has defined models that define the very essence for automobile makers around the world, and a fortress of luxury. This has ultimately led to BMW’s success around the world.
