BMW remains the competition to beat

The BMW X3 and BMW X1 are two models that offer stiff competition to other automakers.


When Cadillac officials met with reporters during the recent tony Pebble Beach Concours d’Elegance in California, they spent a surprising amount of time discussing their competition — in particular, BMW. With its new compact sports sedan called the ATS, the Cadillac is taking aim at the Bavarian manufacturer, which has become the benchmark of performance luxury.
“It won’t be easy” to take on BMW, said Cadillac General Marketing Manager Don Butler, but if the company has any hope of regaining credibility in the luxury market, General Motors’ flagship brand has no other choice. And it’s not alone.

 

 

Last year, the BMW logo adorned more luxury cars than any other brand sold in the U.S., and the brand’s formidable reputation for making its self-proclaimed “ultimate performance machines” establishes it as the king of the hill that virtually every high-end auto9maker targets, from German rival Mercedes-Benz to Toyota's Lexus
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Time and again, that has proven easier to say than do, and BMW has continued to gain ground in recent years. But it certainly doesn’t mean competitors are backing down. Audi, for instance, is making inroads with products that deliver a mix of solid handling and acceleration along with eye-catching design .Akio Toyoda, president of Toyota, Lexus' parent company, has vowed to put more “passion” and “performance” into new and redesigned products like the LS 460 sedan that will go on sale later this year.
“I would not tell you the truth if I said I did not care” about the challenge the competition is presenting, said Ludwig Willisch, who last year became the CEO of BMW of North America. He added he's also intent on maintaining the position BMW gained in 2011 as the U.S. market’s luxury sales leader.
Being No. 1 “is meaningful to us,” said the German executive, and not just when compared to the likes of Cadillac, Mercedes or Lexus. Though BMW was the luxury sales leader in the U.S. in 2011, China surged to become BMW’s top market. As of June, however, the U.S. is back in the lead — although BMW of North America is now in a tight race with Mercedes-Benz. And after seeing its sales collapse in 2011 as a result of product shortages stemming from Japan’s March earthquake and tsunami, Lexus is now back in the competition, as well.
BMW has rolled out a number of new models in recent months, including an all-new 3-Series, several high-performance M models, the new X1 compact crossover and, for 2013, it will update its flagship 7-Series.
The new X1 targets a fast-emerging compact crossover segment that Willisch anticipates will bring “new customers we haven’t seen so far.”
The German luxury automakers, collectively, have launched what is considered the most aggressive era of product proliferation in automotive history. As soon as some product gaps are identified, BMW, Mercedes or Audi rapidly jumps in – usually with the Teutonic competition quickly following.

 

“It’s all about entrepreneurial spirit,” says Willisch, who downplays concerns that BMW is overdoing it. A few years ago, the maker saw skeptics abound when it rolled out the X6 Sport-Activity Vehicle, a crossover blending attributes of a conventional SUV and a sports coupe. But demand has been strong enough to convince the maker to prepare a smaller version, the soon-to-launch X4.
Still, not everyone is convinced. Lexus CEO Mark Templin says he has no interest in adding “100 new models … because I don’t have to,” especially at the lower end of the luxury spectrum. The Japanese marquee brand doesn’t intend to compete with the X1 or the 1-Series passenger car because that, Templin says, is the role of the mainstream Toyota brand.
He does have a point. Skeptics dub such mini-luxury models as “compliance cars,” which luxury makers like BMW – and Mercedes-Benz – have to add to their lines in order to meet strict new U.S. mileage mandates and toughened European CO2 rules. Lexus, Cadillac and Audi can turn to down-market sibling brands, such as Toyota, Chevrolet and Volkswagen.
Indeed, while BMW is rolling out a number of new battery-cars and plug-in hybrids, such as the new 3-Series-based ActiveE and the upcoming i3 and i8 models, Willisch acknowledges they’re likely to generate collective volumes “in the four digits.”
More conventional hybrids, such as the revised 2013 7-Series version, could do better. A recent study found that the Toyota Prius is frequently found as a companion to luxury models like the 7-Series in the 10 most affluent ZIP codes in America. More and more luxury buyers, whatever their income and net wealth, says Willisch, “are interested in fuel economy,” even if it’s just driving something they can brag about to friends and neighbors.
Last year’s strong showing by BMW in China makes it clear that the maker will have to adapt to global realities. It is developing new products specifically for China, notably a stretched version of the 3-Series appealing to buyers who prefer being chauffeured. But no worries, insists the BMW of North America chief, the maker “will continue to build ‘truthful’ BMWs” that can live up to the ultimate driving machine image.

 

But expect the manufacturer to also put more emphasis on design, creature comfort and safety, as well as quality and customer service. If competitors and Cadillac want to take a shot at BMW, the Bavarians are more than ready to return fire.