Wed
Aug 05 2009

Premium Sustainability

Hilton Holloway
Just before our lead news story about the next-generation ‘low-carbon’ 3-series went to press, BMW announced that it was pulling out of F1.

Dr Norbert Reithofer chairman of the board said ‘it’s a resolute step in view of our company’s strategic realignment.

‘Premium will increasingly be defined in terms of sustainability and environmental compatibility. This is an area in which we want to remain in the lead.’

Having talked to BMW bosses and insiders about the all-new ‘green’ 2012 3-series a few weeks ago, the F1 decision didn’t come a great shock.

Even so, I think a major car manufacturer coming out and effectively declaring F1 ;environmentally unfriendly' probably rocked the F1 circus more than it would admit.

But I also think that the F1 coverage missed the essence of the story. BMW has decided to bet its future business on being both upmarket and environmentally friendly.

It’s a strategic decision that will significantly alter the way it develops and sells cars, as our story on the 2012 3-series explains.

We’ve had environmental scares before. The oil crisis of the early 1970s eventually (after quite a lag) produced a few aerodynamic experiments such as the Ford Sierra and Audi 100, as well triggering Toyota’s hybrid developments and introducing a 55mph speed limit in the US.

BMW also had an early toe in the water in 1983 with the fuel-efficient 525e (e for eta – Greek for efficiency) with its lazy, torquey engine and long-striding gearing.

We had another environmental scare at the end of the 1980s (remember acid rain, leaded petrol and the hole in the ozone layer?) led by then-PM Mrs Thatcher, who made a very early speech on the perils of global warming.

This eventually led to specialist urban cars such as the Mercedes A-class, Audi A2, Smart and the 90mpg VW Lupo 3L.

The point is that all these panics faded and while the environmental influence on the auto industry left its mark, it did not fundamentally change the direction of the industry.

Cars are faster, more powerful, more luxurious and heavier than they have ever been. Only the widespread adoption of modern diesel engines has improved overall economy.

A couple of years ago, I spoke to a senior BMW employee who said the company was watching the latest environmental movement closely. ‘We want to see if it sticks this time.’

Clearly, BMW has now taken the view that it will. The company's marketing brains must also believe that it will not be regarded as a premium brand in the future if it doesn’t become overtly environmentally friendly.

But the company won’t be producing wild or revolutionary designs. BMWs, say insiders, will continue to be slick and desirable.

It’s just that your next 316 will have a three-cylinder turbo engine, some very sophisticated underfloor aerodynamics and will, eventually, see every under-skin component re-thought for the fuel-sipping future.

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About Hilton Holloway

Has two product design degrees and used to design mountain bikes. Realised that cars were a lot more interesting in 1990, and has been writing about them ever since.

Comments

TegTypeR August 5, 2009 8:48 AM

F1 could easily become more environmentally friendly (from the outside at least, because lets face it any circus that travels the world and using as much transport and as many resources as F1 is never going to be eco happy) by switching to a sustainable, non food bio fuels.

Not only will this speed up the development of such fuels and the engines that run them, but it will also be relatively cheap for the teams to convert to because so much of the tech is based on a standard four stroke engine.

Scott B August 5, 2009 9:35 AM

BMW did not say F1 was environmentally unfriendly.

They said they were going to transfer the investment from F1 into sustainable technology development as this is necessary for future prestige brands.

It would seem, 20 years after the seismic shock of the first LS 400, BMW once again feels in needs to play catch up with Lexus.

North August 5, 2009 10:22 AM

BMW are knackered and it sounds like HH is their PR guy! they were not winning in F1 and they could not afford it either with resource (internal engineering) or money or indeed PR.

They are now deciding to repeat the old BM trick of trying to find a niche; but everyone else has caught them up in some many other areas and the green thing is just the last gasps of a dead fish.

It is looking to try to keep residuals high with using little styling change etc....its buggered (I have been saying it for ages....).....as said, I am pretty sure this now spells the sell off of Mini (I am hugely confident they will sell mini)......but we will see....one thing is for sure....they have big issues....they should start looking for a volume partners and quick.....Ford would good for them but not sure Ford would go for it....maybe with a nissan-renault type deal...but BM need a partner...if all they have is a Mondeo look a like and some fuel savings at premium prices......well if that is all they have...they are more than buggered..not forgetting the ugly X6 and PAS efforts....

......BM need a strategic alliance and need it fast or they have to sell mini....or even both....they might even get taken over completely by Daimler in the next five years....it will be interesting to watch though.

GaryW August 5, 2009 10:29 AM

"Even so, I think a major car manufacturer coming out and effectively declaring F1 'environmentally unfriendly' probably rocked the F1 circus more than it would admit."

Hmm, wonder if BMW would have declared F1 environmentally unfriendly if they'd been at the front of the grid rather than at the back?

rosstopher August 5, 2009 11:05 AM

not sure about selling mini, i think they would see it as the brand being a failure, which it obvioulsy isn't. A lot of BMW dearlers are moving their mini showrooms back into their bmw showrooms to save costs though.

rosstopher August 5, 2009 11:05 AM

not sure about selling mini, i think they would see it as the brand being a failure, which it obvioulsy isn't. A lot of BMW dearlers are moving their mini showrooms back into their bmw showrooms to save costs though.

North August 5, 2009 12:38 PM

rosstopher..exactly...the mini bubble burst...as I understand (it was reported) they needed 275K units per year to pay back the cost but at the height only got 250K (figures from memory and not sure if that was the old unit)....thus in those terms mini failed; no question.

what it comes down to is the ability to develop new cars etc and expand range etc.....BM sales have dropped and they will always (without doubt) focus on the core product which is not mini.

I cannot see them selling RR (it fits well with the 7 series etc) thus the real none core is mini...they only have a certain amount of resource...so they either ditch it or partner (but then its not a BM).....so what do you do....it also "kind of" competes with the 1 series and then they want the city car akin BMW Smart.....I am certain mini is going in 6 to 12 months.....I could be totally wrong but I think its off.....so we will see!!

MrNorthToYou August 5, 2009 5:00 PM

North had a very good point right up to where in Breaking News you can find 'PSA could get mini paltform'. Seems they were ahead of you North.

The question is would you pay 18k plus for a mini premium- no thanks!

Or buy a French version of the mini - no thanks!

HiltonH August 5, 2009 5:02 PM

Reithofer actually said..

'As our company places stronger focus on sustainability initiatives, our participation in Formula One becomes less a key promoter of this engagement.'

Sounds like BMW thinks F1 can't be squared with 'sustainability initiatives'.

jer August 5, 2009 8:09 PM

Out of step then will be the new 5 which looses it's aluminium front structure in favour of cheaper steel.

theop August 5, 2009 9:16 PM

its all about the money and image I think... If they d been winning, they wouldnt be pulling out...

The fact they play ball with Force India (just) having spent 4 times the money does not bode well, and Germans are generally bad losers unlike the english. They can see the F1 project does not do them any favours in sales and is also uneconomic... all else is management talk....

On the general strategy, if BMW continue to make well made cars that are mainstream sporty enough and drive well, they will be ok... If they lose that BMWness then all is lost

North August 6, 2009 7:18 AM

MrNorthtoyou; just for the record I have been banging on about BM either partnering with a firm and or being taken over for ages....its been years....it was obvious.

For BM, they have placed themselves in a hole and to be fair, I do not think they will be okay, the business they have has to shrink and thus it will not be stable (inlfux) and then the issues with the models and the competition and the costings......

BM (as I have said many times) are in a knife edge position, do I think they will pull through....in the present form NO.

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