bmw falls victim to u.s. success

[Dave Eaton]

from the autonews wire - an interesting point of view for those of us used
to paying real money for our cars...

dave
'03 rs6
'04 allroad tdi
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BMW falls victim to U.S. success

Guido Reinking
Automotive News Europe 

If there were an award for last year's most profitable premium brand, it
would be an unequivocal victory for Mercedes-Benz.

After cutting Chrysler loose, profits at Daimler, Mercedes' parent, have
shot upward like an untethered balloon. None of its rivals could keep up.

There was a surprise in last year's results, though. Audi's profit margin
topped BMW's. And Audi accomplished the feat without a financial arm of its
own. Parent company Volkswagen handles the brand's leasing and financing.

BMW's comparatively bad showing demonstrates just how right CEO Norbert
Reithofer has been in pursuing drastic cost reductions. Anyone who
continually sells more cars without making more money is heading in the
wrong direction.

BMW's results can be excused only partly by rising raw material prices. In
the United States, BMW has become a victim of its own success. The weak
dollar most hurts the import company selling the most in the United States.

But some of BMW's problems are homegrown. The 7 series has $2,500-$5,000
dealer incentives in the United States. BMW wouldn't need to support the
vehicle if it were more attractive.

The U.S.-built X5 premium SUV scores well with U.S. customers and reportedly
has 60 percent local content. But its expensive engines and transmissions
still come from Europe and must be paid for with a weak dollar. So it hasn't
had the effect on BMW coffers that the company was seeking.

In a perverse sense, Audi should be grateful to Ralph Weyler, its departed
sales and marketing chief. Contrary to his clear mandate, Weyler only
halfheartedly looked after the American market.

Weyler's inattention helped put Audi far behind Mercedes and BMW in U.S.
sales. But as an unintended positive result, the dollar's weakness today is
barely affecting the company.

That's certainly a silver lining. In fact, it makes one wonder if the folks
at Audi might be secretly hoping for Americans to buy a record number of
BMWs again this year, too.