Sell your soul, lose your reputation
09-22-08, 12:31 PM
#1
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Sell your soul, lose your reputation
I fear for BMW. The people who make “The Ultimate Driving Machine” may be making the ultimate mistake. The worst part of this is that this can be avoided if it looks to its domestic competitor a couple of hours away in Stuttgart. With all the new models planned by BMW in the next five years (at least 3 new model lines, 4 new models for existing lines, and one addition to an existing line,) I think BMW may have not learned Mercedes’ hard lesson that comes with reaching beyond its limits.
Both companies have built a reputation for a quality product, but Mercedes is having to rebuild after tarnishing its spotless image. People would pay a premium for a Mercedes because they are supposed to last forever. This is a carefully crafted image that that came from building strong products. But what allowed them to be so successful was a small product line. Up until the 90s, Mercedes mainly only made three passenger cars: medium sedan, large sedan, and sports car. The engine choices were shared across the whole brand. The top engine for the medium sedan would be the bottom choice for the large sedan; the sports car borrowed its engine from the large sedan; and so forth. So while they did make a quality product (the diesel engine is truly indestructible,) it also didn’t hurt that Mercedes’ technology resources only had to be spread across a handful of engines and parts.
Then in the 90s Mercedes got ambitious. Enter whole new classes like the A, C, G, SLK, and later GL, R, as well as more variations within the class like the CLK. The original models still remain, the E-Class is the medium sedan, the S-Class is the large sedan, and the SL is the sports car. Just now they are just crowded a little more by new siblings on the Mercedes-Benz car lots.
New models are never a bad thing in business, but Mercedes experienced growing pains that put a huge dent in the three-point star. Mercedes was now engineering and producing more individual engines then they ever had in history, and fewer parts were shared across the brand. Quality immediately suffered because of the individual attention all these new cars needed. The German company was introduced to a new term: lemon.
Mercedes has already bounced back. It identified the problem (growing pains) and has gone back to doing what Germans do best, engineering.
My fear is that BMW doesn’t see this lesson. It started out just like Mercedes by mostly making a small, medium and large sedan (today’s 3, 5, and 7-Series) as well as coupe models based on these cars. Just like Mercedes, BMW started major expansions in the 90s that led to car like the Z3 and X5, and then later cars like the Z4, X3, Z8 and 1-Series.
BMW has done better than Mercedes at basing the new cars very heavily on the existing cars, but that doesn’t meant its eyes are on the big picture. BMW is a company that believes that it needs to have a competitor to just about every passenger car the Mercedes makes. There is no other reason I can think of but spite that would make BMW want to give birth to the pseudo-wagon PAS.
This kind of mentality is bringing on a slew of new cars. While many are based on some existing parts, this still means more new engines and spreading engineering resources over more cars and their parts. I can only hope that BMW knows what it’s doing. It may seem crazy being a little suspect of a company that builds cars that are rarely short of perfect, but people thought the same thing of Mercedes only a few decades ago.
Both companies have built a reputation for a quality product, but Mercedes is having to rebuild after tarnishing its spotless image. People would pay a premium for a Mercedes because they are supposed to last forever. This is a carefully crafted image that that came from building strong products. But what allowed them to be so successful was a small product line. Up until the 90s, Mercedes mainly only made three passenger cars: medium sedan, large sedan, and sports car. The engine choices were shared across the whole brand. The top engine for the medium sedan would be the bottom choice for the large sedan; the sports car borrowed its engine from the large sedan; and so forth. So while they did make a quality product (the diesel engine is truly indestructible,) it also didn’t hurt that Mercedes’ technology resources only had to be spread across a handful of engines and parts.
Then in the 90s Mercedes got ambitious. Enter whole new classes like the A, C, G, SLK, and later GL, R, as well as more variations within the class like the CLK. The original models still remain, the E-Class is the medium sedan, the S-Class is the large sedan, and the SL is the sports car. Just now they are just crowded a little more by new siblings on the Mercedes-Benz car lots.
New models are never a bad thing in business, but Mercedes experienced growing pains that put a huge dent in the three-point star. Mercedes was now engineering and producing more individual engines then they ever had in history, and fewer parts were shared across the brand. Quality immediately suffered because of the individual attention all these new cars needed. The German company was introduced to a new term: lemon.
Mercedes has already bounced back. It identified the problem (growing pains) and has gone back to doing what Germans do best, engineering.
My fear is that BMW doesn’t see this lesson. It started out just like Mercedes by mostly making a small, medium and large sedan (today’s 3, 5, and 7-Series) as well as coupe models based on these cars. Just like Mercedes, BMW started major expansions in the 90s that led to car like the Z3 and X5, and then later cars like the Z4, X3, Z8 and 1-Series.
BMW has done better than Mercedes at basing the new cars very heavily on the existing cars, but that doesn’t meant its eyes are on the big picture. BMW is a company that believes that it needs to have a competitor to just about every passenger car the Mercedes makes. There is no other reason I can think of but spite that would make BMW want to give birth to the pseudo-wagon PAS.
This kind of mentality is bringing on a slew of new cars. While many are based on some existing parts, this still means more new engines and spreading engineering resources over more cars and their parts. I can only hope that BMW knows what it’s doing. It may seem crazy being a little suspect of a company that builds cars that are rarely short of perfect, but people thought the same thing of Mercedes only a few decades ago.
09-22-08, 08:13 PM
#3
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09-22-08, 08:32 PM
#5
Lexus Fanatic
New models, though, don't necessarily mean they are chasing sales. Sometimes the sales just aren't there. That was the case with the Pacifica-like R-Class, which Mercedes officials now admit was a mistake.
In fact, this is ironic, because I pointed out to the Mercedes reps at the D.C. Auto Show, several years ago, that the R's market aim was questionable....it was too much like its own corporate running mate Chrysler Pacifica (Chrysler was Mercedes-controlled at the time). They looked at me like I didn't know what I was talking about (the German auto industry, of course, is known for its arrogance). Both vehicles, not surprisingly, ended up eating away at each others sales.....and each never sold well to begin with. The Pacifica has been dropped, and the R-Class is about to, if not already done.
So, what does this have to do with the thread topic....BMW sales? Well, I don't see much of a market for the X6 either. It's too big, too expensive, too thirsty, somewhat awkwardly styled, and was just introduced at the wrong time, with no clear market objective. Some in the automotive press have called it BMW's Aztek (though I don't think it is ugly at all, despite its somewhat awkward stance). I would not be surprised, however, if, 3 or 4 years from now, the BMW people come to the same conclusion about the X6 that the Mercedes people did about their R-Class.
09-22-08, 08:50 PM
#7
The thing that will make this interesting is that as the other two continue to expand downward, Lexus continues upward and has mentioned that it has no plans of heading downmarket past the IS and RX.
I started a thread about a year ago called "How long can Lexus remain #1?" which touched on some of these issues with the German companies. Thread : https://www.clublexus.com/forums/sho...n+lexus+remain
Some of that information is now a bit outdated, but all in all I still stand by those thoughts. As BMW and Mercedes head downmarket and Lexus plans more F models, hybrids, and an exotic sports car while refusing to dip below the RX or IS...it just seems to me that Lexus stands a good chance of gaining a more prestigious brand image over time. Part of the reason that these German companies are going downmarket is profit, as the more cars that they can share common technology between, the more that they can rationalize a business case for any one. Lexus has Toyota, which allows them to enjoy healthy profit margins without ever having to dip below entry level luxury. Lower priced models means that more people can afford them, more people that can afford them means more of them on the road, which starts to chip away at the exclusivity factor.
It will be interesting to see the automotive landscape in 10 years.
I started a thread about a year ago called "How long can Lexus remain #1?" which touched on some of these issues with the German companies. Thread : https://www.clublexus.com/forums/sho...n+lexus+remain
I got to thinking yesterday about the onslaught of new models coming from the German car companies- 1 series, X6, new C Class, GL, GLK, R, coming A4, A5, R4, Q7, Q5, and others. These are models that will certainly be game-changing for their respective brands, and I wonder how this will affect Lexus.
Sales success has been great for Lexus, but traditionally we have only been fighting the 3-5-7series or C-E-S-CLK-SL and lower priced models have led the way for Lexus, over their more expensive bavarian competition. Case in point: RX and ES, now the second generation IS...the cars that when combined account for a clear majority of sales. These cars under-cut the price of their competition undoubtedly, that has had a lot to do with their sales success. Reliability and quality too? Of course, but there is no denying that Lexus has a price-and effectively a sales- advantage. X5 and ML arrived a few years ago but the RX was first and had won over thousands of loyalists by the time they arrived, and was still priced less than either of it's German competitors.
This got me to thinking, what will happen when the tables turn and BMW's start from $25,000? And Mercedes new C300 is priced from just $31,000. Not to mention the Audi A3 which has not necessarily been a run away success, but will likely be up for a redesign shortly and Audi is gaining popularity ever faster.
Things are not stagnant at Lexus though. The new LS has been selling in record numbers, the second generation IS has been a smash hit, the RX is still selling beautifully into it's fourth year on the market, and the new LX 570 is just around the corner. The ES, despite it's quality problems, has also been selling wonderfully. Also consider the forthcoming IS coupes and hard-top convertibles, and the IS-F.
...amidst $20K BMWs and $30K Mercedes and Audis, is this really enough to retain the number one sales spot though? Considering the lower production numbers of more expensive cars like LX and LS, and the limited production of IS-F, my bet is going to be no. Simply put, more people can buy cars that cost less. When the German companies dive deeper into the entry level market, and even create products that are less expensive than Lexus models, I think that it will be inevitable that BMW, or even in the long term, Audi, will supercede Lexus as the number one luxury brand in sales.
All of that considered though, such a "dilution" of the German brands could only be good for Lexus when you think about it. Not so long ago, Jaguar was somewhat of a unique icon in the luxury car world...held in a slightly higher esteem than BMW and Mercedes because of their exclusive status and rarity. Not to the point of a Rolls Royce, but they piqued the interest a bit more when you saw one. As Lexus continues to move up market with cars like the new LS and LX, LF-A, hybrids, and "F" performance division, I also think that it is not impossible for them to surpass BMW and Mercedes in prestige, not unlike the former glory of Jaguar.
Sounds like a bit of a long shot, but the upper management at Lexus has already noted that they will not go below the IS or RX, meaning that the price of admission for a Lexus will always be at least $32,000 or so...whereas that for a Mercedes, BMW, or Audi will/could be considerably less. Once the LF-A debuts, we will indeed have a higher priced product than BMW, succeeded only by AMG and V12 Mercedes models. I would expect that in the coming years, Lexus will aim to match high power models from Mercedes on a performance, and effectively, a price basis. Mercedes enjoys an international status as the pinnacle of luxury, heritage, and the ultimate cache. BMW is held in a somewhat less esteemed light, but is certainly still very admirable. The downmarket ventures of both of these companies will in effect, leave open the spot of their former glory and prestige. Considering Lexus' up-market aspirations, growth, technology, increasingly affluent customer base, and product line, I do not think that it is intagible for Lexus to assume such a position.
Sales success has been great for Lexus, but traditionally we have only been fighting the 3-5-7series or C-E-S-CLK-SL and lower priced models have led the way for Lexus, over their more expensive bavarian competition. Case in point: RX and ES, now the second generation IS...the cars that when combined account for a clear majority of sales. These cars under-cut the price of their competition undoubtedly, that has had a lot to do with their sales success. Reliability and quality too? Of course, but there is no denying that Lexus has a price-and effectively a sales- advantage. X5 and ML arrived a few years ago but the RX was first and had won over thousands of loyalists by the time they arrived, and was still priced less than either of it's German competitors.
This got me to thinking, what will happen when the tables turn and BMW's start from $25,000? And Mercedes new C300 is priced from just $31,000. Not to mention the Audi A3 which has not necessarily been a run away success, but will likely be up for a redesign shortly and Audi is gaining popularity ever faster.
Things are not stagnant at Lexus though. The new LS has been selling in record numbers, the second generation IS has been a smash hit, the RX is still selling beautifully into it's fourth year on the market, and the new LX 570 is just around the corner. The ES, despite it's quality problems, has also been selling wonderfully. Also consider the forthcoming IS coupes and hard-top convertibles, and the IS-F.
...amidst $20K BMWs and $30K Mercedes and Audis, is this really enough to retain the number one sales spot though? Considering the lower production numbers of more expensive cars like LX and LS, and the limited production of IS-F, my bet is going to be no. Simply put, more people can buy cars that cost less. When the German companies dive deeper into the entry level market, and even create products that are less expensive than Lexus models, I think that it will be inevitable that BMW, or even in the long term, Audi, will supercede Lexus as the number one luxury brand in sales.
All of that considered though, such a "dilution" of the German brands could only be good for Lexus when you think about it. Not so long ago, Jaguar was somewhat of a unique icon in the luxury car world...held in a slightly higher esteem than BMW and Mercedes because of their exclusive status and rarity. Not to the point of a Rolls Royce, but they piqued the interest a bit more when you saw one. As Lexus continues to move up market with cars like the new LS and LX, LF-A, hybrids, and "F" performance division, I also think that it is not impossible for them to surpass BMW and Mercedes in prestige, not unlike the former glory of Jaguar.
Sounds like a bit of a long shot, but the upper management at Lexus has already noted that they will not go below the IS or RX, meaning that the price of admission for a Lexus will always be at least $32,000 or so...whereas that for a Mercedes, BMW, or Audi will/could be considerably less. Once the LF-A debuts, we will indeed have a higher priced product than BMW, succeeded only by AMG and V12 Mercedes models. I would expect that in the coming years, Lexus will aim to match high power models from Mercedes on a performance, and effectively, a price basis. Mercedes enjoys an international status as the pinnacle of luxury, heritage, and the ultimate cache. BMW is held in a somewhat less esteemed light, but is certainly still very admirable. The downmarket ventures of both of these companies will in effect, leave open the spot of their former glory and prestige. Considering Lexus' up-market aspirations, growth, technology, increasingly affluent customer base, and product line, I do not think that it is intagible for Lexus to assume such a position.
It will be interesting to see the automotive landscape in 10 years.
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09-22-08, 09:43 PM
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BMW and Mercedes should not be worried about one another, they should be worried about Audi. It's seen double digit growth for the last year or so and has public stated that they want to surpass BMW as the largest luxury auto maker by 2015. This echoes VW Groups setiment to become larger than Toyota by 2018 I believe. This all may hampered by the German soap opera going on in Wolfsburg right now (Porsche ownership struggle), but they certainly do have the capital assets, product portfolio and brand to back up thier lofty claims.
Consider that Volkswagen AG is the world's third largest auto maker (with the most employees of any manufacture worldwide), and hold only a little less than 1% of the American market (2% if you factor in Audi/Lambo/Bentley) . If they can grow that by even a few percentage points, they actually have a chance of toppling BMW and Toyota over the next ten years. Never say never.
Consider that Volkswagen AG is the world's third largest auto maker (with the most employees of any manufacture worldwide), and hold only a little less than 1% of the American market (2% if you factor in Audi/Lambo/Bentley) . If they can grow that by even a few percentage points, they actually have a chance of toppling BMW and Toyota over the next ten years. Never say never.
09-23-08, 05:02 AM
#9
BMW is creating markets for people who are easily conned out of lots of money.
The thing for BMW and MB is that they don't have econo brands. So they can move around. Whether or not they lose prestige in the process is up to debate but Toyota can sell the lower models and Lexus sells the higher end ones. There really isn't a need to sell lower model Lexus' because you have Toyota. BMW and MB don't have that luxury.
The thing for BMW and MB is that they don't have econo brands. So they can move around. Whether or not they lose prestige in the process is up to debate but Toyota can sell the lower models and Lexus sells the higher end ones. There really isn't a need to sell lower model Lexus' because you have Toyota. BMW and MB don't have that luxury.
09-23-08, 07:20 AM
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Although I think BMW, Mercedes and many other car makers are all about profit, sometimes, car companies want to be creative, inventive and give their design team a chance to showcase talents. After all, they are just car guys like us.
Every luxury brand knows their bread and butter is in the entry level luxury car, even Bently introduced such a car in the GT to boost sales. Porsche has the Boxter, BMW the 3, and Mercedes the C class.
The other cars in the line help to define the brand. They don't make the money off of the AMG or M models, they simply build loyalty and enthusiasim for their cars.
It is easy to follow market trends, i.e. every company built an SUV a few years back, Porsche included and in the case of Lexus and Mercedes, 3 SUV's.
Now it is all about the small car and that is where they have to go to remain viable.
Instead of having a fleet of trendy cars, we should actually applaud companies for thinking outside the box. While I will never buy an X6, as it fits no practical purpose in my life (Or anyone elses for that matter), the CLS was a breath of fresh air. Paving the way for the new VW CC, a potential BMW 8, and the Audi A7.
It can be considered stretching too thin, or it can be thought of as being inovative. Although I hated the Mercedes C Coupe hatchback thing, the tristar looks better to me know than it ever did. And BMW's 1 series is an ongoing debate as to whether it has made BMW better here or worse. Now both brand are maybe not as exclusive as in the 80's, but maybe that is a god thing! I think so.
Every luxury brand knows their bread and butter is in the entry level luxury car, even Bently introduced such a car in the GT to boost sales. Porsche has the Boxter, BMW the 3, and Mercedes the C class.
The other cars in the line help to define the brand. They don't make the money off of the AMG or M models, they simply build loyalty and enthusiasim for their cars.
It is easy to follow market trends, i.e. every company built an SUV a few years back, Porsche included and in the case of Lexus and Mercedes, 3 SUV's.
Now it is all about the small car and that is where they have to go to remain viable.
Instead of having a fleet of trendy cars, we should actually applaud companies for thinking outside the box. While I will never buy an X6, as it fits no practical purpose in my life (Or anyone elses for that matter), the CLS was a breath of fresh air. Paving the way for the new VW CC, a potential BMW 8, and the Audi A7.
It can be considered stretching too thin, or it can be thought of as being inovative. Although I hated the Mercedes C Coupe hatchback thing, the tristar looks better to me know than it ever did. And BMW's 1 series is an ongoing debate as to whether it has made BMW better here or worse. Now both brand are maybe not as exclusive as in the 80's, but maybe that is a god thing! I think so.
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