BMW could ax several small cars in cost-cutting drive, report says
With a new CEO ready to take over next month, BMW finds itself in the latter half of the decade with a seemingly endless variety of models, aimed at very narrow segments that few suspected even existed 10 or 15 years ago. And therein lies the problem: The proliferation of niches and sub-niches has reached a level where it has become too costly to maintain this variety and to update it every few years in pursuit of that one customer for whom the model is tailored.
Automobile magazine reports that the pendulum is about to swing the other way. BMW is seeking ways to cut costs by cutting models, prompted by a slowdown in sales in several key global markets, as well as a measurable drop in earnings and return on investment. That’s not all that BMW is currently facing: Automobile notes that the automaker needs to achieve a 25 percent drop in fleet-wide emissions by 2021 — that bill is coming due very soon — via increased sales of hybrids and EVs. It certainly hasn’t helped that BMW has been very skittish about EVs until very recently, but it also needs to find a way to replace the sales of diesel models, which have predictably tumbled since the Volkswagen diesel crisis of 2015 that is still continuing to produce headlines in Germany. In all, BMW needs to save $14.5 billion between now and 2022, and one of the ways that it plans to do that will be by trimming model and option variety.
What BMW cars could be on the chopping block soon?
In a nutshell, the ones that produce the least profit for Munich: Automobile notes that BMW is having trouble making money on cars that sell for less than €40,000, or about $44,500, in the marketplace.
“The rear-wheel-drive 1 Series, the 2 Series, and lower-trim 3 Series variants contribute very little if anything at all to the bottom line, and the company has established a list of doomed models,” Georg Kacher at Automobile reports. “In addition to the three-door 1 Series, 2 Series Gran Tourer, and 3 Series GT, tombstones are being chiseled for the 2 Series convertible, standard-wheelbase 7 Series, Z4 replacement (sorry, Toyota), and both two-door 8 Series variants.”
That’s right: The BWM Z4 is barely on its way to store shelves at the moment, but its replacement is already in doubt as BMW eyes fatter profit margins provided by larger vehicles. Among other things, this means that we could see the pocket-size X2 depart to make room for (brace for it!) the BMW X8, which has already been greenlit, according to Automobile, and will follow the already huge X7. What’s more, this model will be offered solely in X8M and M Performance trims — there won’t be any poverty-spec versions of this luxury galleon.
BMW would probably admit that the 2-Series range, most of which is not offered stateside, has gotten a little out of control when it comes to body-style variety, and most of those models certainly retail well below the $44,500 mark. Another surprise mentioned by Automobile is the standard-wheelbase 7-Series, a variant that has not been examined under a microscope for quite some time but has quietly become a niche model given the popularity of the long-wheelbase 7-Series in a number of crucial markets like China.
What about the Z4, you’re probably saying, didn’t BMW just spend a ton of effort and money on developing it?
It did, and now it probably wishes that it had used as much existing architecture as possible (re-skin a 2-Series convertible, for example) to offer such a model. The Z4 was never going to be a sales leader — the segment just isn’t that big to begin with — and it has to fight off a large gang of Porsche models for every sale to a customer. How the math looks on the Toyota side of the Z4 model (which we’ll call Zupra) is probably even more frightening — it was always going to be a niche offering, but just how many buyers will still be out there in year two and year three of its time on the shelf?
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